Sales numbers also increased in March, as compared to February. Once seasonally adjusted, they were up by 2%, which indicates the expected seasonal effect.

However, sales numbers were down by 11% year-on-year.

With the notable exception of Auckland, the number of properties listed for sale continued to decline in markets around the country.

Nationwide, there were 2,397 fewer houses for sale in March than there were this time last year.

REINZ chief executive Bindi Norwell said March reflects the seasonal peak for the year so far with the largest number of homes sold and the largest increase in month-on-month – as expected at this time of the year.

However, the tale told by the March data is overlaid by a new factor: REINZ released its new House Price Index (HPI) today.

Developed in partnership with the Reserve Bank and using unconditional sales data, the HPI analyses how prices in a market are influenced by a range of attributes – including land area, floor area, and number of bedrooms.

Norwell said that the HPI takes many aspects of market composition into account and, as a result, provides more accurate and timely results.

When applied to the March data, the HPI indicates that the lift in the median price was largely driven by changes in the underlying mix of dwellings sold in March compared to February, she said.

“While the median price went up $51,000 across New Zealand, the HPI was stable month-on-month, at 0.0% change, indicating more sales in higher price brackets than lower ones.”

The HPI numbers are backed by anecdotal evidence from around the country, which indicates investors and first home buyers are facing more challenges in securing bank lending compared to this time last year.

“This is lowering the number of dwellings sold in the lower price bracket. As a result, there are comparatively more sales in higher price brackets, which is lifting the median price.

“Although this gives the overall impression of rising prices, the underlying data shows that the median is moving more due to differences in the mix of dwellings being sold each month.”

Year-on-year, the HPI indicates that activity nationwide has lifted by 10%, is up by 8.3% in Auckland and by 13% outside of Auckland.

When it comes to Auckland, the Super City recorded another big jump in median price to reach a new record of $890,000 in March, along with a seasonally adjusted 3% increase in sales volumes on February.

But Norwell said it should be noted that the ‘March effect’ is more pronounced in Auckland than in other regions and that levels of inventory in Auckland saw a 47% increase over the past month.

“The market appears more balanced, offering opportunities for buyers as well as sellers, as inventory levels has risen to the highest point in five years.

“This provides more choice for buyers and days to sell are coming back to historic norms.”

“Sales rose marginally for a second straight month, but they remain more than 20% below last year’s peak level, while house prices remained close to flat for the month.”

Gordon said the new HPI confirmed their sense that house price inflation has cooled substantially in recent months.

“In particular, prices in Auckland have been effectively flat since last August. Previous hotspots such as Hamilton and Tauranga have also slowed. However, prices are still rising at a moderate pace in many of the smaller regions.”

In his view, the slowdown in the housing market is due to the introduction of the investor-focused LVRs last year and, more significantly, rising mortgage rates which have ended the downward trend in borrowing costs.